Fountain Powerboats files for Chapter 11 bankruptcy again

Posted on 23 January 2012

Fountain Powerboats and its affiliates filed for Chapter 11 bankruptcy protection last week for the second time in less than three years.

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The filing was recorded Jan. 18 with the bankruptcy court in the Southern District of Florida, West Palm Beach. The company listed more than $53 million in liabilities and less than $50,000 in assets, according to court documents.

A total of $53,605,987.16 is owed to First Capital, according to the filing. No additional creditors are listed in the initial bankruptcy filing. A creditors meeting is set for Feb. 13.

“Debtor estimated that, after any exempt property is excluded and administrative expenses paid, there will be no funds available for distribution to unsecured creditors,” the filing states.

Parties included in the case are: American Marine Holdings, Donzi Marine, AMH Government Services, Baja Marine, Fountain Dealers’ Factory Super Store, Fountain Powerboats Industries Inc., Fountain Powerboats Inc., Fountain Powerboats LLC, Palmetto Park Financial and Pro-Line Boats.

The Washington, N.C., boatbuilder previously filed for Chapter 11 on Aug. 24, 2009, in the Eastern District of North Carolina. Since coming out of that Chapter 11 filing in 2010, the company has struggled financially, been engaged in a lawsuit with former owner and company namesake Reggie Fountain and seen many officers and employees come and go through its doors.

In December, Craig Barrie, a 30-year veteran of the marine industry, was named general manager of the four American Marine Holdings Inc. boat companies — Baja Marine, Donzi Marine, Fountain Powerboats and Pro-Line Boats — in an announcement by Ronald Glass, the court-appointed receiver and a principal in GlassRatner Advisory & Capital Group.

Glass was not immediately available for comment this morning, telling Soundings Trade Only via e-mail that he had a hearing in bankruptcy court today.

Speaking with Soundings Trade Only in November, Glass said the company was building boats and finishing work in progress. “We are slowly but surely calling people back to work and are in business and had reasonable traffic at the [Fort Lauderdale International Boat Show],” he said at the time.

First Capital filed suit against Fountain last fall, seeking $61.04 million in damages for an alleged breach of loan agreements, according to documents filed in October in North Carolina. First Capital also alleged misappropriation of funds.

Also last October, Liberty Associates announced that it had ceased providing management services to American Marine Holdings, and Liberty’s affiliate transferred its nominee ownership interest in American Marine to First Capital, a portfolio company of HIG Capital.

After Fountain Powerboats filed for bankruptcy in 2009, Liberty Associates and Fountain filed a joint reorganization plan and Liberty acquired the company. Former owner and founder Reggie Fountain was initially retained as CEO, but the two parted ways at the end of 2010.

Earlier this year, Reggie Fountain sued his former company for money he says is due him, as well as trophies and pictures from his racing days. Court documents Fountain filed also contain numerous allegations of past improper business dealings by Liberty CEO Bill Gates.

Fountain Powerboats filed counterclaims against Reggie Fountain, saying Fountain took company property, as well as trade secrets, when he left the company. Fountain has repeatedly denied those allegations and says there are no trade secrets at Fountain.

That case remains open, according to the court’s website.

Comments

Fountain boats and many other builders are in deep trouble. Gasoline will be $4.50/ gallon this summer. For the average Joe who still has a job and likes to ram about in his small boat, that pleasure is done.

12 gallons of fuel and a quart of oil are going to cost $60. Not exactly small potatoes when they are spending that same $60 to get to work for the week. Noticed it in 2011 that many boaters spent their time in their slips or floating out past the breakwall in larger groups. Nobody had the money to travel. 5 years ago, 80 mile trips were the norm, and now are not even considered amongst my boater friends.

I too have been accosted by those unfriendly souls who disapprove of my recreational choices.

reggie is a nice guy met him once great boatbuilder as far as robbing the bank why not if you are smart enough look at what the banks are doing to us Hopefully he beat Mercury for some money too

50,000 in assets??? I'm raising the BS Flag on that one !!!

chaulk another one up to our "great banking industry"..probably got paid huge for putting this deal together...$50k in assets? The molds, land and even the building (regardless of the loan) are worth more than $50k...to kill off Donzi and Fountain..they were only in it to suck the cash out..the bankers and liberty should go to jail

AnonymousBob,

You do realize you are the pot calling the kettle black don't you? Do you hear yourself? Do you really think you know everything about a person, and are ready to judge them wholy based on a letter here on this forum? Amazing!!!

Mark Passeri
A & S Boats
South Windsor, CT.

"floridafishfinder":
Thanks for the kind words. I really like your hypocritical statement: "Otherwise, I have found that liberals can be some of the most foul-mouthed, intolerant, ignorant, (nasty) heaps of human flesh one can imagine." And the "greenie-weenies" name calling is another highlight for your resume. I'm glad you're such a tolerant, kind human being. You bring such honor to those of us who really are tolerant, kind people. (Not really...)
My "definition of capitalism" question was dripping with sarcasm, in case you missed it.
The housing debacle has many guilty parties, so your indictment of "liberals" is tremendously off base. I wouldn't expect you to know anything about it because you've had too much of the Fox "News" Kool-Aid, but suffice it to say that the Republicans are as much to blame for the housing crash as anyone else. Kinda like Newt Gingrich lobbying for Freddie Mac (to the tune of $1.6Million) while ridiculing them at the same time. It's called hypocrisy and you're a prime example of it.
You make me laugh, too! And it's at you, not with you.

Stay tuned for part 128 of this story, my guess is that the 4 boat brands and the NC plant would be right down E J's alley...time will tell.

Mark Passeri:
You make some good points regarding the extreme fringe 'greenie-weenies'. They can be very hospitable only if you fit in their narrow view of "what's right". Otherwise, I have found that liberals can be some of the most foul-mouthed, intolerant, ignorant, (nasty) heaps of human flesh one can imagine.
AnonymousBob:
Thank you! You never fail to make me laugh. Although you make a couple of good points regarding the housing bubble (caused by government regulations fueled by liberal beliefs that everyone should have a $500,000 home whether or not they can actually PAY for it), and the oil speculators (that is a fact). But you veer WAAY off course when you state, "I mean, that is the definition of capitalism, isn't it??" Your statement is more telling to your core beliefs than you likely realize. Perhaps totalitarianism or communism would better suit you. I'm sure Hugo Chavez would welcome you to Venezuela so you two can drill for oil in American waters, deforest old growth rain forests in the name of 'progress' and blame American Capitalism for all the ills in the world. Oh if you do go, please take your buddy O'Bummer and his 'ol lady with you. Thanks again!

Hey, First Captial, I've got $20 in my wallet, will ya loan me 2 or 3 million dollars? I'm good for it, trust me.

I always said "the boat industry shines at helping smart guys recirculate their money earned in other industries "back" into the economy".

Interestingly, someone just happened to incorporate 3 new LLC's in NC this week.

1) Fountain Brothers Investments, LLC
2) Fountain Custom Boats, LLC
3) Fountain Performance Engines, LLC

Just speculation but more than likely the former owner is going to try to relaunch the company, not under the RFB name this time. I believe the last deal was structured in a way that he could not use the "Fountain" name so I am sure this will end up in court as well.

yes it was perfectly legal but that doesn't make it right. when opportunity and greed come together they are a powerful combination. I myself am proud to label myself a republican and i too look for more conservative views politically and economically. the bubbles of our economy have started to burst and will continue to deflate furthering the economic downturn in the long turn. 5.00 gas even 3.50 gas kills everything. the high and mighty liberals think they know better than you but its an economy killer, our economy thrives on oil and they refuse to recognize how beneficial low energy cost would benefit the country and all industries as a whole. by not allowing energy production to flow freely indicates the agenda is more important than the quality of your life. if you ask an energy expert (and i have) wind and or solar energy is a pipe dream, the numbers arent there to supply this countries energy needs with either. why do you think the government has to subsidize solar or wind energy production -- because it doesn't work. the same goes for ethanol fuel - it cost more to make ethanol than 100% gasoline and its less efficient so you have to burn more of it to reap the same energy production. keep this in mind the economy has been in a terrible down cycle for about 4 going on 5yrs and still is in a down/correction cycle unlike anything we have ever seen . the worst is yet to come, cannot be avoided with deficit spending exceeding 15 trillion.in other words your life is going by and the quality of life you could be having is being squandered by self righteous political figures who have a different view of what your life should be. again they know better than you. however their lives will not be disrupted in any way because they are the haves, they are the elite, you poor slobs do as i say not as i do. perfect example of good democratic leadership. you can bank on the 4 to 8 years to be of the same horrific economic conditions unless major changes are implemented. it is what it is.

$53MM debt to $50K asset ratio is obvious insider loan fraud.

AnonymousBob, funny, I've noticed, you're always anonymous, so you can flame away I suppose. You missed my point, which was how politcally incorrect it has become to drive a performance boat, due to the constant blathering and intolerance by enviromentalists, which sail boat owners always seem to be when ever I engage them in conversation. I am well aware of the other economic pressures on the boating business, I have been successful surviving this downturn by making constant adjustments in the way I run the business, and the product that we sell, which is why I had the foresight to drop Baja BEFORE they stopped selling completely. I got tired of running the Baja museum as I used to call it.
I was trying to explain why I thought performance boats were hit particularly harder than other types of power boats. Like jet skiis though, if you allow one to be banned or made un-welcome, soon it will be ok for all to be.
I don't think $5 a gallon gas had everything to do with the failure of performance boats. Those that can afford them can afford to feed them, just like cruisers still went boating, just not as far maybe.
By the way, I am an independent voter, and have voted both republiccan and democrat. I don't dislike either, as long as they are conservatives, as that is what I consider myself.

Mark Passeri:
Way to stay on topic. (sarcasm)
I guess you totally overlooked the housing crash and resulting recession that maybe, just maybe, was the real handwriting on the wall. Or, possibly, the run up in crude oil prices by market speculators that drove fuel to $5/gallon? To link a failed rejuvenation of the Fountain brand to environmentalists is a tremendously long, asinine stretch.
By the tone of your post, I'm probably safe thinking you are a Republican. You should be applauding the group that bought Fountain, reaped a few million $ in "fees", and then declared bankruptcy. I mean, that is the definition of capitalism, isn't it??
The actions by the Fountain group are no different than what Irwin Jacobs did with the Genmar bankruptcy. It's perfectly legal as prescribed by the law. Whether it's ethical is a totally different topic.
The last thing our industry needs is another black eye like this, or the resulting personnel layoffs. The potential loss of those brand names is also disheartening, especially as the economy seems to be seeing some light in the tunnel.
Back to your regularly scheduled programming........

Here's a dealer's take on it. We were a Baja dealer from 1991 through 2006. I loved those boats, they were a blast, but the hand writing was on the wall. I enjoyed having a 33-40 foot Outlaw for my demo for 10 years in a row, but the last 5 were tough! Even though I always piloted very courteously, and kept the exhaust going through the prop to be quiet, (unless I was out in the ocean running wide open, which was required with 500 HPs), especially going past sail boats, I would have all the rag baggers giving me the bird, even going only 30MPH!!! I had my kids with me every weekend, and one time we are idling quietly through a no wake zone, with all four kids sitting up on the back bench seat in clear view, just enjoying the stereo, and this rag bagger starts yelling obscenities at us for nothing, right in front of the kids. This became the norm, and I could feel the green pressure coming. This should be a warning to all of us selling all kinds of power boats. Though I don't get the same treatment driving my Chaparral cruiser, (which by the way, uses more fuel, even though it is slightly shorter), even though I drive exactly the same way, (very courteously), I still see it coming. The environmentalists are doing their best to end power boating. In our state the liberal governor Malloy, (a wanna be Obama), within a month of being sworn in, tried to put 5 new taxes on boaters. It amazes me they are the ones who preach tolerance, but have no tolerance for those who don't think the way they do. You go boating to have fun, and enjoy other boaters company. If Obummer gets in again, we are all done IMHO, they will be all about trying to lay more guilt and telling you what you can drive. No one wants to go boating and be persecuted by these whack job liberals, and driving a performance boat became just that.

Mark Passeri
A & S Boats
South Windsor, CT.

I sold alot of gas to Fountain owners before it was over 5 bucks a gal. in 2007 , not a drop after that .My marina went out of business in 09.

everybody wants to be in the boat business. typical high growth company with no plan to manage growth resulting in failure i.e. bankruptcy. who in their right mind would pick up this company and think they can make a go of it in this economy - poor judgement on the investment firm and even worse judgement by any bank or lending institution to lend monies to this outfit. more than likely these deals were structured so that someone or a group of someones were paid very well with knowing that this would be a failed venture. squeezing the last bit of blood from a slaughtered pig so to speak. very likely a government program/infusion/loan could have been employed as well.the best thing that could have happened and most likely will happen now is it will go thru bankruptcy and the companies will be sold off individually, this will be the only way to save any particular namesake. If Reggie still has some pull he should surround himself with the right people, recover the Fountain brand and tooling and create a manufacturing facility that mimics a custom California boat builder and sell boats by order only. the days of 250,000.00+ boats on the dealer floor plan are gone...feel free to contact me and i will be glad engage in a consulting position.

Gee, it must be nice to have $50,000 in assets and have someone lend you $53 million. Now lets see, where is the incentive to repay this loan??
So I file bankruptcy, lose my company and have millions. Good deal. And people wonder why banks are failing at a record pace.

So is this the end or just a new beginning??? This company has more lives than a cat.

Really Torques me!

Just look at the pathetic debit liability to asset ratio.
The idiot bank, banks that are responsible for that poor decision should and deserve to lose their jobs, bank and what ever else applies.
That's just plain BS.
I don't run my business like this and have been in business for thirty years....and very proud to be totally debit free with cash reserves.

Gary J. Linden
Linden Propeller Co., Inc.

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